SAP's war for SMB dominance

Shashwat Chaturvedi






MUMBAI: One has to take a left from the Western Express Highway to reach Hotel
Grand Hyatt in Mumbai, where the recent



SAP summit was held. Close to the venue, parked on the side were two

publicity trucks displaying a large hoarding where they could be visible for all

to see. The hoardings were not from Oracle or Microsoft, who compete with SAP

tooth and nail but from two small players, namely,



3i Infotech and



SAS.






While SAP may have more or less captured the


ERP market in the larger enterprise space, the small and medium business (SMB)

space could be a totally different story. According to some estimates the number

of SMBs in India vary in the five million and thereof range. A majority of these

SMBs are less than 100 people workshops and hardly have any kind of IT

infrastructure in place. Most of their investment is ad hoc, but the encouraging

trend is that things seem to be changing. These companies are trying to update

themselves either out of competition or compliance. And this is the pie every

one is aiming for.






SAP has been working on an Indian SMB strategy since 1998, when it appointed a
few resellers to cater to that market segment. SAP also launched its Business

One solution for the SMB segment in January 2006. Ironically, the launch of

Business One was quite late when one compares it to launches in other

geographies.






Says, Alan Sedghi, CEO, South Asia, “SAP is seeing a larger penetration in the
SMB segment, and it also happens to be an important part of our growth engine.”








According to him, SAP has got close to 70 customers for Business One, and Sedghi
is targeting 500 customers by the year-end. The company has so far signed up 161

new customers in two quarters, including this one, and a significant numbers of

them are from the SMB segment.






To increase its presence in Tier II and Tier III cities, the company has an
aggressive stratagem in place. SAP recently signed up IBM as a national

distributor.






“We already have a partnership with HP, and with this association with IBM, I
hope to have over a hundred partners in India by the year end. We are very

ambitious about our growth strategy for this space,” adds Sedghi.






What about the local players, who seem to be more aware of the needs and
requirements of the SMB segment? Sedghi argues that SAP is the best choice for

the customer. “Most of the local solutions on offer are just generic packages

and cannot even be termed as a full fledged ERP solution. They just provide

certain functionality, like accounting or inventory management. Meanwhile we

have a whole range of solutions that suit the needs of a growing enterprise,

right from Business One to mySAP Business Suite,” he says.






SAP had also recently announced a partnership with Patni to target the SMB
segment.






Recently Henning Kagermann, CEO, SAP, at the SAP Sapphire event in Paris had
reportedly mentioned his concern about the aggressive local players in India and

China, and had spoken about the need to 'fill the gaps in product portfolio, to

counter these companies'. Sedghi cautiously agrees, “Acquisitions are totally

based on the needs of our customers. As our portfolio is quite comprehensive,

hence the acquisitions are few and far between,” he says.






But wouldn't it make logical sense for SAP to acquire a few of these logical
players, who know the customers better. Sedghi maintains the same line, only

agreeing, “if it is in the interest of the customer community, SAP would be

looking into it.”






Meanwhile SAP's biggest competitor


Oracle is not sitting tight either. Oracle had offered free download of

starter edition database that could be used by SMBs and developers sometime

back. The company also has an aggressive game plan in place for the marketplace.








SMB is going to be space to watch out for, as the smaller players could prove to
be more agile and responsive to the needs of the local community, something that

is hard for these MNCs to emulate. They could easily indulge in a guerilla

business-fare tactics like undercutting, etc. Like those two hoardings displayed

prominently outside the SAP Summit venue, these local players seem to be in no

mood to give up without a fight.






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